Revenues Up In TM’s 2Q

Ticketmaster’s first SEC filing after being spun off from IAC showed revenues increased 30 percent to $382.4 million, according to the company’s second-quarter financial report.

Domestic revenues were driven by a 9 percent increase in the average revenue per ticket and a 5 percent increase in the number of tickets sold, TM said, along with contributions from the company’s acquisitions of TicketsNow and Paciolan early in the year. TM also reported increased revenues internationally in markets including Canada, China (Emma Entertainment was acquired in 2007) and Australia.

According to the filing, TM’s largest client, Live Nation (and its subsidiary House of Blues), represented approximately 18 percent of combined revenues for the three months ended June 30, compared with 23 percent during the same period in 2007. Live Nation’s contract with Ticketmaster will expire at the end of the year, while HoB’s contracts sunset in 2009.

The filing detailed another parting of ways. Former TM parent company IAC sold a portion of its investment in Irving Azoff’s Front Line Management in June to Madison Square Garden at the same price IAC paid to acquire its investment in the management company.

Also, the IRS is currently examining the IAC consolidated tax returns for the years ended December 31, 2001, through 2003, which includes the operations of Ticketmaster from January 17, 2003, the date which Ticketmaster joined the IAC consolidated tax return.

Net income dropped 34 percent to $23 million, compared with 2007’s 2Q results. Operating income decreased $5.2 million from the same period in 2007 to $40.2 million this year, which TM attributed to amortization of intangibles and non-cash compensation expenses.

Marketing costs tripled to $24.6 million, and administrative costs rose 14 percent, the report said.

IAC’s spinoffs of Ticketmaster, HSN, Interval Leisure Group and Tree.com couldn’t have come at a better time. The company reportedly used $2 billion in borrowed money to finance the split, which would be impossible to obtain at this point given the condition of the financial markets.

Following TM’s filing last week, Stifel Nicolaus & Co. analyst Scott Devitt upgraded the company from a hold to a buy.
“We think Ticketmaster has some issues but that it is also a sustainable and profitable ongoing entity and, as such, believe value-oriented investors should begin to accumulate positions at current levels,” he wrote.